4,000 jobs at risk as Tata Steel begins merger with Thyssenkrupp

The deal is set to cost around 4,000 jobs over the next few years – and sites in Wednesfield, Brierley Hill and Walsall could be in the firing line.

Plants in our region will now be part of a leading European steel enterprise with sales of £13 billion and a workforce of about 48,000, currently at 34 locations.

But workers who have witnesses a steady erosion of steel jobs in recent years are now braced for further cuts after the two companies revealed they have taken the first step towards a merger by signing a memorandum of understanding.

Merger talks started around 18 months ago after Tata decided not to sell its UK steel business, which currently employs around 8,500 people. That includes more than 600 in the Black Country, most of them at the Wednesfield Steelpark – the headquarters of the company's distribution business – and the rest at a bakeware steel factory at Bescot in Walsall and a smaller site at Brierley Hill.

The flat steel businesses of the two companies in Europe and the steel mill services of the Thyssenkrupp group will merge in the proposed 50:50 joint venture.

But it will not include Thyssenkrupp sites in the UK, where it currently employs around 1,750 including 170 at a plant in Cox's Lane, Cradley Heath.

The deal will cut costs across the businesses by £350 million to £500m a year, but Thyssenkrupp warned that will mean axing around 4,000 jobs over the coming years,

That will include up to 2,000 administration jobs and up to 2,000 jobs in production, split roughly across the two companies, which is to be named Thyssenkrupp Tata Steel and headquartered in Holland.

While unions have offered a cautious welcome to the deal, Roy Rickhous, the former Wednesfield steelworker who is now general secretary of the main industry union, Community, has warned the new company is in for a fight if it tries to impose job cuts on UK production workers.

He said: "While a merger of this size will inevitably mean a review of support functions such as HR and IT, the vast majority of these roles are no longer located in the UK. We have been assured there will be no asset closures or reductions in production capacities across the UK.

"If the company does seek to implement compulsory redundancies we will fight that using every necessary means."

German unions have already been expressing alarm in recent months about the jobs cost of a possible tie-up, with the latest in a string of demonstrations planned for the city of Bochum on Friday.

But management at both companies have hailed the merger.

Andrew Robb, chairman of Tata Steel Europe, said: "This announcement marks the latest step in building a future for Tata Steel's activities in Europe which is sustainable in every sense."

Business Secretary Greg Clark said the announcement was an "important step" for the steel industry.

He said: "The Government has been working hard with the unions to secure a sustainable future for Tata Steel in the UK, its 4,000 employees at the Port Talbot site and its supply chain.

"The agreement between Tata Steel and Thyssenkrupp is an important next step in establishing their shared ambition for Port Talbot as a world-class steel manufacturer, with a focus on quality, technology and innovation."

The merger between the Indian-owned steel firm and its new German partner is expected to be completed next year. It follows a deal that allowed Tata to shed the historic £15bn UK steel industry pension fund that had proved a major roadblock to a tie-up.

Heinrich Hiesinger, chairman of the executive board of Thyssenkrupp, said: "This business combination creates a strong number two and is thus much better positioned to cope with the structural challenges in the European steel industry."